Too Little, Too Late?

We have to find the courage to make the changes in our country that are necessary to bring it back to the top of economic and social development in Europe." That's what a revved-up Gerhard Schröder told parliament last week in an impassioned address broadcast on national television. So does the German Chancellor finally get it? With unemployment now topping 4.7 million — 11.3% of the workforce — and growth last year an anemic 0.2%, Schröder's proposed reforms come none too soon.

INDICATORS Another wrong number Deutsche Telekom joined the list of Europe's hard-hit wonders, breaking a German record with a 324.6 billion loss in 2002. Although the Continent's largest telecom firm says it's on track, it still carries 361 billion in debt. Homeland Insecurity The U.S. economy has bunkered down, with retail sales falling 1.6% last month and payrolls plunging 308,000 — the most since the Sept. 11 attacks. Paying The Piper As the International Energy Agency warned that OPEC's spare daily capacity may fall a million barrels short of demand during an Iraq war, China moved to cut its dependence on Middle Eastern oil. Two state-owned firms agreed to buy British BG Group's $1.2 billion stake in the Caspian, raising the chance of a pipeline to China. Try A Kilt Next Time A British civil servant successfully sued his employer for making him wear a tie to work, alleging sexual discrimination because female workers were not subject to the same requirement.

They include reducing long-term unemployment benefits to the same level as welfare payments, to encourage the out of work to look for jobs; amending Germany's rigid job-protection laws to allow smaller companies to take on temporary staff; and lowering state health-insurance premiums from 14.3% to 13% to bring down nonwage labor costs. The business community was dubious. "The proposals are not enough to turn the economy around on their own, let alone to cure the long-term structural malaise," said Holger Schmieding, European economist at Bank of America in London. "If more buoyant global demand does not come to the rescue soon, Germany will remain in deep trouble." — By Charles P. Wallace/Berlin

Reconstructive Criticism
It was about as discreet as a Rumsfeld one-liner: the U.S. has requested bids for $900 million to rebuild Iraq, using only American companies — including Vice President Cheney's old firm Halliburton. That prompted British M.P. Vincent Cable, backed by rapturous cheers, to ask Prime Minister Tony Blair if he was "embarrassed" to support a President who regards "war as an opportunity to dish out contracts to his cronies." The Foreign Office later said "it seems perfectly fair that if American money is being used, the work goes to American companies." True, that's fair in the U.S., where the relief agency USAID requires contracts to go to U.S. groups; but British firms must vie for British aid money with foreign competitors. The stakes, argues chief executive of the British Consultants and Construction Bureau Colin Adams, are not actually that high: "These projects are a steady, long-term grind, without vast profits." Yet he and many others still hope the U.S. will allow "steadfast allies" to subcontract work, as they did in Afghanistan.

Corus Sings The Steely Blues
When conflict happens in a marriage, the most common reason is money. Last week Corus — the steelmaker forged in 1999 from the merger of British Steel and Dutch firm Hoogovens — looked perilously close to divorce. To address its scarred financial position — Corus has lost about 32.9 billion since the merger, most of it on the U.K. side — the British-led management had planned a 3805 million sale of some of Corus' aluminum interests. When the Dutch supervisory board blocked the move, the management took their Dutch overseers to court — and lost. To add to the misery, Corus 2002 results showed a net loss of 3675 million and triggered the resignation of British CEO Tony Pedder. Corus will likely now lay off thousands more of its 26,000 U.K. workers. Still, financial woes may keep the marriage intact; the cost of demerging could force Corus into receivership. — By Jennie James

The Bottom Line
"Sure, losing hurts, but not nearly as much as paying lawyer's bills."
DAVID WARE, head of TeamTalk, after he lost a best-of-three arm-wrestling match to settle a €102,000 legal dispute with a rival telecommunications firm in New Zealand